By Keith Loria, Contributing Editor
TruAmerica Multifamily has received $156.83 million in financing to acquire a six-property, 1,413-unit multifamily portfolio located in the states of Washington and Oregon.
Brian Eisendrath and Cameron Chalfant of CBRE’s Beverly Hills office secured the loan for TruAmerica.
“The portfolio had all the ingredients that excite lenders; solid, infill locations, experienced institutional sponsorship, and moderate leverage,” Brian Eisendrath, CBRE Capital Markets’ vice chairman, debt & structured finance, told Commercial Property Executive. “By doing a deep dive into the business plan on each asset, we were able to match the most aggressive capital yielding the best returns. For example, on some of the properties, TruAmerica wanted prepayment flexibility in the event they decided to sell, while other assets, they wanted to hold for several years.”
CBRE secured seven-year, fixed-rate loans with three years interest-only on four of the properties, with a blended interest rate of 3.85 percent. The remaining two properties were financed with floating-rate loans with three years interest-only and a starting rate of 2.60 percent.
“Lenders are realizing that the multifamily market in particular is very strong. We have seen above average rent growth and are expecting even more rent growth. As such, we are seeing lenders have a very strong appetite for multifamily—getting more aggressive on spread, interest-only and overall deal structure,” Eisendrath said. “In particular, lenders are seeing the positive attributes of workforce housing—such as lack of new construction and the growing renter pool. We think this trend will continue for lenders and bode well for owners.”
The four properties in Washington include the 188-unit Alderwood Park, located in Lynnwood; the 153-unit Ridgegate, located in Kent; the 221-unit Ridgetop, located in Silverdale; and the 240-unit Wellington, located in Silverdale.
The two Oregon properties are the 296-unit Boulder Creek, located in Wilsonville and the 315-unit Bridge Creek, also located in Wilsonville.
TruAmerica will invest more than $25 million across the portfolio to extensively renovate the properties’ amenities, including making significant upgrades to the existing clubhouses, fitness centers and landscaping. The scope of work also will include attractive renovations to unit interiors with the addition of new faux wood flooring and carpet, countertops, appliance packages, and washers and dryers at specific properties.
According to Colliers’ 2015 Q2 Portland Multifamily Report, Portland’s suburban multifamily market has seen strong rent growth that will continue for the remainder of 2015 and demand for apartments has been unexpectedly strong in areas such as Wilsonville.
Eisendrath added that the Pacific Northwest region has seen some of the best job growth metrics nationwide in its metropolitan areas, such as Seattle, where employers including Boeing, Amazon.com, Microsoft and Google helped reduce the city’s unemployment rate to 3.6 percent in August. Like Seattle, Portland benefits from a diverse array of economic drivers, which have propelled the city to become the 6th highest-performing metropolitan area in the nation with a 3.1 percent market vacancy rate, according to rental data company Axiometrics Inc.
TruAmerica has invested more than $500 million in the Pacific Northwest since June, and its Pacific Northwest portfolio is expected to be more than 6,000 units by the end of 2015.